International groups dealt weak hand in Japan's casino gamble

The Japanese lawmaker spearheading a push to legalise casino gambling in the country has warned international gaming groups that they will struggle to win licenses without taking on local partners.

The move is a rebuke to foreigners such as Sheldon Adelson, billionaire chief executive of Las Vegas Sands, who want to crack the potentially vast new market on their own.

Takeshi Iwaya told the Financial Times in an interview that he was "extremely worried" that a legalisation bill that is expected to pass parliament by mid-year could be delayed by procedural issues, even though it enjoys multi-party support.

"Of course we need foreign companies' expertise and knowledge, but they may have trouble adapting to Japan's particular characteristics," Mr Iwaya said. "Ideally, foreign companies with rich expertise would join forces with Japanese groups."

The number of casinos that would be licensed initially remains unknown. Mr Iwaya laid out a scenario involving four resorts, one each in two big cities - Tokyo, the capital and Olympic host city, is widely seen as a shoo-in for one - and two more in outlying regions. Together they would generate Y2tn ($19.5bn) in gaming income, he said.

Mr Iwaya heads a group of 210 lawmakers who have been rallying support for what would be Japan's first casino resorts, projects that some believe could turn Japan into a major regional gambling destination to rival Macau and Singapore.

The ruling Liberal Democratic party, to which he belongs, has endorsed the bill as have several smaller parties.

The only obstacle to the bill's passage in the current session of parliament, which is scheduled to end in June, is the legislature's busy agenda, he said. The cabinet affairs committee, which must review the bill before it is presented to the full legislature, has seven pieces of government-proposed legislation to debate in addition to the private member casino bill.

"They have to get through the government bills first, so I am extremely worried," Mr Iwaya said, though he added that he remained confident that the bill would ultimately pass. "We have the Olympics coming in 2020, and although this isn't strictly related to the Olympics, there is a consensus that we need to put more effort into tourism."

The prospect of a new gambling market in the world's third-largest economy - one adjacent to high-rolling China - has excited international casino operators. At an investor conference in Tokyo last week that was attended by executives of several major Las Vegas-based groups, Mr Adelson said he was willing to spend "whatever it takes". to build in Japan

But while he conceded that he was "not ruling it out" working with local partners, he said he would prefer to work alone and argued that Sands, the world's most valuable gaming company and an owner of casinos elsewhere in Asia, had enough money and experience to do so. "These people can't keep up," he said of other would-be operators.

Mr Iwaya laughed when recalling what he described as the "bold" remarks by Mr Adelson. "We have no intention of keeping out foreign groups," he said, before adding, "Japanese people have a unique mentality. If an outsider tried to do everything alone, they might find they didn't fit in."

If the casino bill passes, a second round of more detailed legislation would still be required to set gambling regulations and licensing requirements, and formal proposals for Japan's first casino projects would not be considered for perhaps two more years. Mr Iwaya will not be in charge of granting licenses, but he is an influential voice in the debate and his views on foreign access are widely shared.

"In this country, it simply doesn't happen that foreigners come in and do big projects completely on their own," said Takashi Kiso, a gaming industry consultant.

"Once you add related industries, the effect could be double that, maybe even Y5tn," he said. "We're talking about adding full percentage point of GDP."

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